The government is set to offer six blocks in the unexplored Vindhyan and Bengal sedimentary basins for oil and gas exploration. Under a new policy, the Centre will not charge royalties on production from companies operating in these areas.

The Directorate General of Hydrocarbons (DGH) will be inviting bids for seven oil and gas blocks during the fourth round of bidding under the Open Acreage Licensing Policy (OALP), likely to open on August 28, sources in the know said. The only block on offer in an already explored area in OALP-IV will be in the Rajasthan basin. Investors will get a window of 60 days to submit their bids.

The government sees this as a milestone in the country’s hydrocarbon sector, as investments so far were limited to only seven of the 26 sedimentary basins in the country.

According to the latest DGH estimates, the 26 basins have in-place resources of 41.872 billion tonnes of oil-equivalent (BTOE), of which 29.796 billion tonnes is undiscovered hydrocarbons.

Bids will be floated after companies submit expressions of interest for these areas, incentivised by a February 19 decision by the Cabinet that waived royalties for unexplored blocks. It also stated that in basins where there was no commercial production, exploration blocks would be bid out exclusively on the basis of exploration work programme, without any revenue or production share to the government. The move is likely to draw more interest from global oil and gas majors, which had not shown much interest in the first three rounds of the OALP.

The Vindhyan basin covers areas under the Son valley, Bundelkhand and Rajasthan, while the Bengal basin is in West Bengal and extends into the offshore region of the Bay of Bengal. The seven category-I explored basins in India are Cambay, Mumbai Offshore, Rajasthan, Krishna Godavari, Cauvery, Assam Shelf, and Assam-Arakan Fold Belt.

Contracts for 32 blocks under the second and third rounds were awarded on July 16. Those rounds saw participation from private players like Vedanta, BP and Reliance Industries, and state-run majors like ONGC, Oil India and Indian Oil Corporation. The first OALP bid round was launched by the government in January 2018, and received 110 bids for 55 blocks covering 59,282 sq km area. The blocks were awarded in October 2018 and production from the first round blocks is expected by 2023.

To achieve the target of reducing crude oil imports by 2022, state-run companies have increased their share of investment in the recent years. Between 2016-17 and 2018-19, ONGC made an investment of about Rs 75,000 crore, while Oil India Rs 9,689 crore in exploration and production activities. Investments made by private and joint venture companies during the period were $562 million under the production sharing contract regime, which was in place before the OALP.